Organization termination in the nonprofit setting: the dissolution of children's rehabilitation services

Public and business sector organizations are the primary subjects of the existing literature on organization termination. This article considers the applicability of the termination literature to the nonprofit organization context. In particular, the literatures of public administration (public agency termination), organization theory (life cycles of organizations), and business administration (firm failure) are used to examine the termination experience of a specific nonprofit agency, Children's Rehabilitation Services (CRS). After more than thirty years of providing residential treatment services to boys with emotional problems, the agency merged with another nonprofit rather than face bankruptcy. To understand the causes of CRS's termination, financial factors, deleon's (1978) obstacles to termination, life cycle theory and the role of the agency's changing environment are studied. The case of CRS illustrates many of the findings of the organization termination literature and introduces a new point essential to consideration of termination in the nonprofit context: the importance of the selection of decision makers with competencies appropriate for the given life cycle stage of the organization.